Participation and fee collections fall a whopping 65% short of estimates

According to a recent report from the Environmental Protection Agency’s Office of the Inspector General (OIG), the EPA is losing money on its lead-based paint program. Based on the agency’s estimates since the Renovation, Repair, and Painting (RRP) rule went into effect in 2010, the total loss will amount to $16.4 million by 2014. Fiscal year 2010 actually turned a profit of $8.9 million, but costs are exceeding fee collections by $25.3 million for 2011 through 2014.

According to the report, three issues are contributing to the EPA’s unrecovered costs. The agency has not conducted recommended biennial cost reviews to ensure that fees are in line with costs, and the fee structure also does not take into account all the indirect costs needed to recover the cost of administering the lead-based paint program. More importantly, the agency notes that RRP firm participation is lower than projected.

Expectations Not Met

Because the economic climate was much more favorable when the original RRP rule went into effect in 2008, the EPA far overestimated the number of RRP renovations that would take place, as well as the expected number of participating firms. In the first two years post-RRP rule (ending in April 2012), the EPA expected 284,000 firm certifications. The actual number of certifications was 65% less at just 100,000 firm certifications. Furthermore, the EPA estimated the program costs and related fee collections to be $61.5 million for the first year and $22 million for each of the subsequent four years. The actual fee collections were just $22 million for FY 2010 and $9.1 million for FY 2012.

The report says that by not recovering all of its program costs, “the federal government did not collect funds that otherwise could have been available to offset the federal budget deficit.” The OIG recommends that the March 2009 fee schedule for the lead-based paint program be adjusted “to reflect the amount of fees necessary for the program to recover the costs of implementing and enforcing the program.” As of March 2013, the report says the EPA agrees with the recommendation and intends to take “corrective actions,” though the time frame has yet to be determined. —Lauren Hunter is the senior products editor at REMODELING. Find her on Twitter at @LaurenHunter_HW or @RemodelingMag.